While nothing is confirmed, one tech law blog feels as though the IRS will bring the hammer down hard with audits against those using the Real Money Auction House in Diablo III.
On the other hand, citizens may be able to convince the IRS that their RMAH transactions are part of a legitimate business and could mark them down as business gains which will offset business deductions. These losses would also include the cost of the game and cost of items you purchased yourself in the RMAH.
Good luck convincing the government that playing a game is really business. Now granted, this is all just speculation. Nothing like this has really been a problem before in games previously, so it may be interesting to see how this pans out.
(via)
Most sales are going to be for “gain.” Some gamers have cleverly reasoned that their earnings should be classified as hobby gains, which are taxable as income but can be offset by hobby losses — e.g., the money spent to purchase the game (and arguably part of the money spent to obtain a computer that meets the game’s minimum hardware requirements). There is a problem with this, however. Hobby losses are considered “miscellaneous deductions,” and therefore can only be deducted to the extent that they exceed 2% of your adjusted gross income (“AGI”).[2] This means that if you make $50,000, you could deduct only those expenses that exceed $1,000! Because most players won’t spend this much on their Diablo III hobby,[3] classifying their RMAH dealings as hobby income won’t alleviate their tax liability.
On the other hand, citizens may be able to convince the IRS that their RMAH transactions are part of a legitimate business and could mark them down as business gains which will offset business deductions. These losses would also include the cost of the game and cost of items you purchased yourself in the RMAH.
Good luck convincing the government that playing a game is really business. Now granted, this is all just speculation. Nothing like this has really been a problem before in games previously, so it may be interesting to see how this pans out.
(via)